VBS. Dewald van Rensburg
then it could be used as so-called secondary capital for the bank. The SARB enforces a minimum level of capital adequacy on banks. This limits the amount of loans a bank can make. With the PIC facility subordinated, VBS had more capital and was free to make more loans. With the amended deal in hand, VBS did exactly that until the SARB cracked down in November 2015, telling VBS it couldn’t use the facility that way.
VBS then seemingly demonstrated its sway at the PIC again. In December, Ramavhunga wrote to Matjila asking that the facility be amended to make it unambiguously count as capital. Forensic investigators couldn’t find a response to this demand. Suspiciously, VBS reported a new R54 million in secondary capital soon afterwards.
Nesane has conspicuously avoided giving his version of events in public.
Alongside Nesane, the other PIC representative on the VBS board, Paul Magula, had a role to play in the set-up of the fuel facility. PIC project manager Brendah Mdluli, who worked on the facility from the original application in 2014, testified that Magula had largely driven the process of drawing up the deal. Throughout, Magula was ‘responsible for the collection and collation of information and all the interactions with VBS,’ Mdluli said.26
The application made its way through the PIC’s cumbersome internal processes, and during this time Magula was promoted to chief risk officer. ‘I was expecting that Mr Magula was going to continue with his role in finalising this transaction … but instead he went silent and did not respond to email requests for comments on the legal agreements that were sent through by the then legal representative, which was Mr Ernest Nesane,’ Mdluli told the Mpati Commission.27
Magula’s relaxed attitude to the risks associated with VBS can be inferred from how his predecessor as head of risk, Zulu Xaba, had taken a diametrically opposed view on the VBS fuel deal. A whole year before Magula took over the position of chief risk officer, Xaba weighed in on the proposal and issued a report unambiguously stating that ‘it is not advised to extend credit to the company’.28 Xaba’s report was not binding, but recommended that, should the deal proceed, it should involve less money.
‘You don’t anticipate that, you know, fraud will happen at the highest level from board and executive managements, so when you put these things together you want to prevent, you know, employees or junior staff from defrauding the company,’ said the PIC’s Zonke in 2019. ‘I mean, you don’t anticipate that your board of directors and your executive management will collude to defraud the company. So from our side, as the PIC, it was – it’s a difficult situation and I still don’t know how we could have done it differently.’29
After VBS crashed, bank statements for Petroport made it into the public domain and the most glaring reason for this lack of oversight was revealed. Both PIC representatives on the VBS board, Ernest Nesane and Paul Magula, along with VBS CEO Andile Ramavhunga, Petroport chair Robert Madzonga, the king’s advisor Paul Makhavhu, VBS manager Tsumbo Matambela and Tshifhiwa Matodzi, had a share in what Ramavhunga later called an estimated R1.25 million ‘pot’ of monthly payouts from Petroport.30
Despite its original ambitions, Vele Petroport ultimately became just a front for distributing patronage into a small VBS-PIC network. And despite Vele’s gross failure to actually build a fuel business, Matodzi still brags about his fantasy diesel empire years later. He told me that Petroport was up and running with significant revenues of around R2 billion by the time the first VBS rights issue was announced in December 2015 and executed in March 2016.31
In a glossy corporate presentation produced by Vele Investments in early 2018, Petroport is mooted as the beginnings of the group. In the presentation, its value is even higher than what Matodzi told me. According to the presentation, Petroport ‘grew organically to become a R3 billion a year business’.
Stranger still is that Matodzi insists that Vele already owned both Mmampilo and Belton Park by early 2016, which, according to everyone else involved, just isn’t true. It is really difficult to tell whether or not he actually believes his own version. Madman or genius, through the fuel scheme, Matodzi had set up patronage machinery that would underpin a whole new saga.
6
The PIC Men
VBS started its journey out of obscurity on the back of the fuel facility money from the PIC and the PIC would be its go-to throughout the drama that ensued. Without the PIC, there would have been no VBS.
Nothing about the story is quite as flagrant as the apparent corruption of PIC men Paul Magula and Ernest Nesane. They were both stars in the organisation holding key positions of trust: head of risk and head of legal respectively. They were deployed to the VBS board precisely because they had ‘roots in Venda’.1 There is no greater indictment of the PIC than having these two men hear, see and do nothing in the midst of a major corporate fraud.
While Magula and Nesane were the two most directly implicated, there is every indication that other staff at the PIC may have been compromised for being VBS beneficiaries. The forensic investigation later commissioned by the PIC found that at least three other PIC officials who may have worked on deals with VBS had VBS loans. The final forensic report referred to these officials by their surnames only: Moloto, Netshikweta and Buthelezi. According to the report, they could not be named due to the PIC’s objection that it might be impermissible in terms of the Protection of Personal Information Act.2
Another clue that more PIC personnel may have been involved came from VBS’s treasurer, Phophi Mukhodobwane. After the fall of VBS, he claimed that he ‘was reluctant to give them the names of the people from PIC’ out of concerns for his safety.3
There is also the fact that the PIC’s CEO at the time, Dan Matjila, received a loan. There is no concrete evidence that this constituted a bribe, apart from the fact that he failed to disclose a R2.4 million mortgage from VBS in March 2017. ‘Dr Matjila was granted a loan in VBS and, in his capacity as CEO … he had a duty to disclose that he received such a loan. In the absence of documentation from VBS, we are unable to conclude whether such a loan constitutes a gratification as envisaged in PRECCA [the Prevention and Combating of Corrupt Activities Act],’ the PIC’s forensic investigators concluded.4
Matjila’s case, however, is far more controversial. When Mukhodobwane testified before the SARB’s investigators, he described an incident in which he personally delivered R5 million in cash, supposedly meant for ‘Dr Dan’, to Matodzi.5 According to Mukhodobwane, he was instructed to withdraw the money from VBS’s Makhado (Louis Trichardt) branch and then use Vele Investments’ helicopter to fly to Lanseria airport in Gauteng. Matodzi allegedly met him there to collect the money.
Bank records do show a R5 million cash withdrawal from the branch in Makhado that day, but the destination of that money cannot be proved. There was apparently a lot of whispering in the corridors at VBS after the teller who counted out the cash grumbled about the experience. This was in the same week that Matjila got his VBS mortgage.
But there is another compelling, and shocking, reason to believe the R5 million had something to do with one or more of the PIC men.
The money was withdrawn on 18 April 2017. The upset teller apparently called Madambi Muvhulawa, thinking the retired VBS veteran might be able to take up the issue with the bosses. Muvhulawa said he unknowingly passed the information on to someone more or less guaranteed to do nothing about it. ‘A teller called me because it is unusual to see cash like that,’ he told me. ‘I phoned Nesane and he said he is going to follow up to see what to do with it. I wanted someone I can trust. He said, “Leave it to me.”’6
For his part, Matjila has been especially vocal in denying the VBS bribe claim. He issued an open letter through the PIC’s media department on 25 October 2018 extolling his own successes as CEO and defending himself against the various allegations he faced at that point. ‘As for my name being linked to the debacle that is VBS, this has to be the lowest of the low in allegations,’ he declared. ‘The mere suggestion that I would accept a bribe – R5 million in cash is abhorrent to me.’7
Whatever other employees of the PIC did or knew, it was Nesane and Magula who were at the front line of doing nothing to stop what was happening at VBS. Nesane